U.S. stocks extended losses on Wednesday after the Federal Reserve said the economy was losing steam across much of the nation.
The Dow Jones industrial average lost 72.43 points, or 0.63 percent, to 11,504.62. The Standard & Poor’s 500 was down 15.50 points, or 1.26 percent, to 1,209.88. The Nasdaq Composite Index dropped 53.39 points, or 2.01 percent, to 2,604.04.
The sell-off came immediately after the release of Fed’s so-called Beige Book, which is a summary of outlooks from the 12 district banks from across the country, showing that business conditions became weaker in most areas of the nation.
“Many districts described the pace of growth as ‘modest’ or ‘slight’ and contacts generally noted weaker or less certain outlooks for business conditions,” said the report.
The market has become overly sensitive to chatters and rumors out of Europe and to the headline news recently. Anything related to a possible solution to the European debt problems can move the market.
Stocks got a blow on Monday as German Finance Minister Wolfgang Schaeuble said governments will not yield a definitive solution to the region’s debt crisis at the European Union’s forthcoming summit on October 23.
Again on Wednesday, remarks from French President Nicholas Sarkozy indicating that talks to tackle the euro zone crisis were stuck sparked another sell-off, one day after a late session rally triggered by a report saying Germany and France had reached an agreement to increase the firepower of Europe’s recently overhauled bailout fund.
Adding to the losses, Moody’s Investors Service downgraded Spain’s credit rating by two notches from As2 to A1 late Tuesday with a negative outlook, warning more downgrade risks in the future.
The technology sector was heavily weighed in most of the session after Apple’s rare earning miss, dragging the tech-heavy Nasdaq down over 2 percent.